Sunday, June 28, 2015

More on the Ulster County Railroad Dispute

Yesterday, I blogged about the Catskill Mountain Railroad dispute. This is an email that I sent to Senator James Seward:

Dear Senator Seward:

There has been an ongoing dispute between County Executive Mike Hein and the Catskill Mountain Railroad, which leases a railroad right of way that Ulster County bought about thirty years ago.  I have blogged about the dispute at  .  The best way out of the conflict is to introduce open bidding so that the party that can most efficiently use the right of way can acquire it through privatization at optimal gain to the county.  That can be accompanied with a tax credit to businesses local to the track, which have been hurt for a century by the Ashokan Reservoir and New York City’s predatory policies. 

The possible bidders are New York City, the existing railroad, and the railroad’s competitors, one of which has told me that it wishes to acquire the track.  The city has already offered a grant to fund removal of the track and replacement with a trail, but it is far from clear that the $2.5 million offer contemplates losses due to the ensuing depression in tourism.  In 2014, the existing railroad’s first good year, about 40,000 visitors came to the railroad.  This meant a million dollars in revenue. At three percent interest, the present value of lost [railroad] revenue of one million dollars per year into infinity is $33 million, but costs need to be subtracted. [In the email I omitted to mention that there may be as much as a $1 million annual loss-- an additional $33 million present value--to local diners, stores, and restaurants; that would reflect $25  in spending per visitor. The present value of the total loss may be closer to $20 million.]  A more complex estimate would need to determine what the value added to the county is; value added includes local wages and purchases of supplies from local businesses.  A $10 million price is probably closer to the value that the city should pay to remove the track.  The city has long exploited Ulster County through one-sided, manipulative deals, as David Soll’s Empire of Water makes clear.

The conflict has reached the point at which a Republican insurgent candidate, Terry Bernardo, has stepped forward.  The solution set of both sides has heretofore been limited to two artificial poles:  (1) the city and  the Catskill Mountainkeeper’s proposal for a trail, which makes artificial projections about the extent of potential use and is indifferent to the effects on small businesses, and (2)  the existing Catskill Mountain Railroad’s proposal to extend the existing arrangement, possibly through a rail plus trail. The Catskill Mountain Railroad  has failed to live up to its 25-year agreement to rebuild the track and has refused to make its financial statements public.  Its business plan does not contemplate its ability to raise the appropriate level of financing.  To be competitive, the city’s bid would need to add say $10 million to the bid that the CMRR or other railroads make to compensate the region for the loss of tourism.  That amount of money could be used, if the city’s bid is successful, to fund tax credits that will enable existing businesses to expand and develop alternative tourist attractions.

Although this issue is not in your direct domain, Senator Seward, I would like to suggest that you offer to procure expertise at the state level to help the county structure public hearings and a public bidding process that will enable the diverse interests to make competitive bids for the property so that it can be privatized and used for the best benefit of the people of Ulster County.  The competition between secretive lobbyists at the DEP and the Mountainkeepers versus the secretive lobbyists at the CMRR is no way to resolve a public debate.  I am copying the Ulster County Legislature with respect to this idea.


Mitchell Langbert

No comments: